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Sanofi-Aventis finally overcame nine months of stubborn resistance against its takeover bid by Genzyme Corporation, the world's third-largest biotech firm after the French pharmaceutical giant agreed to sweeten its offer from $18.5-billion to $20.1 billion.  Paris-based Sanofi-Aventis, the world's fourth-largest drug maker, yesterday agreed to hike its offer by $5 a share from its previous $69 per share to $74 per share in cash plus additional payments linked to the success of certain Genzyme's experimental drugs, which could potentially add another $3.8 billion to the $20.1 billion offer.
In addition to the cash payment, each Genzyme shareholder will receive one Contingent Value Right (CVR) for each share they own, which will entitle the shareholder to receive additional cash payments if specified milestones related to Lemtrada (alemtuzumab MS) are achieved over time or a milestone related to production volumes in 2011 for Cerezyme and Fabrazyme are achieved. Terms of the CVR agreement call for additional cash payments under certain circumstances. The CVR will be publicly traded. The agreement is structured such that the economic upside at each milestone is shared between Sanofi-Aventis and Genzyme shareholders. The CVR terminates on 31 December 2020 or earlier if the fourth product sales milestone has been achieved. The details of the one-time milestones and payments are as follows: - $1.00 per CVR if specified Cerezyme/Fabrazyme production levels are met in 2011.
- $1.00 per CVR upon final FDA approval of Lemtrada for multiple sclerosis (MS) indication.
- $2.00 per CVR if net sales post launch exceed an aggregate of $400 million within specified periods per territory.
- $3.00 per CVR if global net sales exceed $1.8 billion.
- $4.00 per CVR if global net sales exceed $2.3 billion.
- $3.00 per CVR if global net sales exceed $2.8 billion.
''This agreement with Genzyme is both consistent with our long-term strategy and creates significant long-term value for our shareholders,'' said Sanofi-Aventis CEO Chris Viehbacher. ''This transaction will create a meaningful new growthplatform for sanofi-aventis while expanding our footprint in biotechnology. We expect it to be accretive from year one, and the CVR structure, which served as an important value bridge between our two companies, rewards both Genzyme and Sanofi-Aventis shareholders, particularly if Lemtrada outperforms the market's current expectations.''
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